Tuesday, March 30, 2010

the health care myths continue

I get a lot of right-wing emails. A large part of that is because of these posts. Friends send my posts to their right-wing friends or relatives (whom I refer to generically as “your right-wing brother-in-law”) and either the friend or his or her right-wing brother-in-law sends me his response. Then I get on his right-wing email distribution list and … they pour in. I read them so you don’t have to.

Based on years of this, and countless right-wing emails, I can make a few generalizations: 1/ They usually allege something factual that is an OUTRAGE. The odds are overwhelming (90+%) that the alleged “facts” are not true. Therefore you should always assume they are untrue unless or until you get them verified from a source you know from direct, personal experience to be reliable. But given the remote likelihood that they are true, it really isn’t worth spending much time attempting to determine that with certainty. 2/ Your right-wing brother-in-law doesn’t really care in the least that they are untrue and time spent trying to convince him of their falsity will never cause him to question either his opinions or the veracity of future right-wing emails. 3/ The likely veracity of the email is inversely related to the number of exclamation points or other expressions of OUTRAGE. The more OUTRAGEOUS the more certain you can be that the email is untrue. 4/ If the email concludes by telling you to send it to everyone you know, the odds of it being untrue are approximately 100%.

As the health care “debate” played out over the past year, there were all manner of viral lies about “death panels” and “free health care for illegal immigrants” and a “federal takeover of health care” and all manner of other things (spread not exclusively or even primarily by email but by FOX News and prominent Republican politicians who, like your right-wing brother-in-law, never really cared whether the stuff they were spouting was true). But until there was actually a bill signed into law, it was hard to definitively disprove all those allegations. That is one of the reasons why it was so important politically for Democrats not to abandon their effort at health care reform. Had the effort failed, the “health care bill” would have lived forever in right-wing mythology (and, eventually, the political conventional wisdom) as all those things it was alleged to be. Since it would have never actually come into existence, it would forever be everything its opponents claimed it was.

Now that health care reform has been signed into law, the right-wing myths haven’t stopped. But it becomes much easier to refute them or at least challenge them. If nothing else, it is now easier to ask, “Given that this is all about private health insurance to obtain medical care through private providers, where is the ‘government takeover” part?” Or, “Point out to me what in this new law is going to result in unplugging granny or free health care for illegal immigrants or health care provided through government ministries.” Or, “What parts of the new law do you want to repeal?”

That said, let me respond to a few of the myths that already seem to have gone viral.

First, let’s note a couple of general points. This law was endorsed by the American Medical Association (AMA), the American Association of Retired Persons (AARP), the American Nurses Association, the American Hospital Association, the Catholic Health Association and just about every other mainstream health policy organization. It was modeled on the 1993 Republican alternative to the Clinton plan, the popular and successful 2006 Romney plan in Massachusetts, and the Bob Dole/Howard Baker/Tom Daschle Bipartisan Policy Center proposal. It can fairly be described as a “centrist Republican approach” (admittedly, the “centrist Republican” has, itself, become a mythical creature).

Claims that health care reform is “Armageddon … that will ruin our country” (the actual words of House minority leader Boehner) do not seem to be shared by the financial markets.

As of March 2, Intrade priced the odds of health care passing at 30%:

So presumably the equity markets had not priced in passage of the health care bill, even fairly recently.

On March 2, the S&P 500 was 1118. It closed today at 1173, up 4.9%. The market has also been up since passage of the bill. So for all the right wing talk of Armageddon, the markets don't seem to share that view. At worst, they shrugged. At best, they viewed it as a positive development. Sure, you can say that there were other things going on in the US economy in recent weeks that might have had a bearing on equity prices. (Some, like a slight uptick in interest rates, would tend to drive equity prices lower.) But if health care reform was going to fundamentally, negatively alter one-sixth (or more) of the US economy, it is reasonable to assume that would be discounted in the prices of equities.

OK, now let’s go to some of the specific myths that have been circulating.

Myth #1:

There has been a lot of hype around the announcement by AT&T that it was taking a $1 billion charge against earnings this quarter because of the health care reform law. Caterpillar says it will be taking a $100 million charge. Deere and 3M are also taking charges. Rupert Murdoch, through the Wall Street Journal editorial page, is, as usual, leading the charge on this issue. In an editorial entitled “ObamaCare Day One: Companies are already warning about higher health-care costs,” Murdoch’s minion’s claim these charges reflect an increase in costs “this year alone” and are "a small measure of the destruction that will be churned out by the rewrite of health, tax, labor and welfare laws that is ObamaCare, and only the vanguard of much worse to come." How, you might ask, could these charges reflect an increase in costs “this year alone” when most provisions don’t take effect until 2014 and even most of those that take effect this year don’t kick in until late September? The answer, of course, is that these charges have nothing to do with costs “this year” – the Journal’s editorial board is, as usual, making stuff up.

I have already received a few right-wing emails on this subject and today even the New York Times picks up the issue in an article entitled, “Companies Push Repeal Provision of Health Law” – a classic example of “he said/she said” journalism. So what’s the scoop on this supposed big increase in corporate health care costs?

Back in 2003, George W. Bush and the Republican Congress passed the Medicare Part D program, a $10 trillion unfunded liability that extends prescription drug coverage to seniors on Medicare. There was concern that with Medicare now offering this prescription drug coverage some companies might drop it from the health care benefits they are already offering their retirees and dump the cost of the federal government. So the Republican Congress gave them a kickback – a subsidy equal to 28% of the cost of a company’s retiree drug benefits – equal to around $1300/year per retiree on average. Not only did the companies get the subsidy, but they didn’t have to report it as income. But here is the really cool part: They also got to deduct the subsidy as an expense. That’s right. The federal government gives them money and the companies get to deduct it as an expense. In normal accounting, an expense is something you PAY not something you RECEIVE.

In retrospect, that looked pretty dodgy. So as part of the health care reform act, Congressional Democrats ended the tax deduction. They didn’t end the subsidy. And they didn’t make it taxable. They only ended the tax deduction for the tax-free subsidy. Yes, folks, this is the new Republican/Chamber of Commerce/Wall Street Journal/right wing rallying cry: “It is an OUTRAGE to take away the tax deduction that big companies get for their tax-free government handout.”

Federal officials estimate that eliminating the tax deduction will raise around $4.5 billion in revenue over ten years. That is roughly the same amount that the health care legislation provides in additional subsidies for companies that maintain retiree health plans. In other words, it's a wash. And the Business Roundtable, an association of chief executives, has estimated, “that health care reform will reduce insurance cost trends for businesses by more than $3000 for each employee over the next 10 years.”

So if ending this bogus deduction only raises $4.5 billion over ten years, how does just one company, AT&T, end up with a $1 billion write down in just one quarter? Good question. I suggest some enterprising reporter delve more deeply into their accounting. Presumably they are claiming that this is the actuarial value of that tax deduction in perpetuity discounted back to the present. That means that the undiscounted tax benefit would have had to be several billion dollars which doesn’t appear to be consistent with the estimated increase in federal revenue. And since when do companies capitalize the benefit of tax loopholes? I suspect that there is a lot more going on with these write offs – like using “ObamaCare” as an excuse to belatedly fix some wildly unrealistic assumptions in their pension accounting.

But I digress.

That is all too much to expect the average misinformed Wall Street Journal reader to discover. All they know (or think they know) is that ObamaCare is bankrupting corporate America (despite the fact that investors appear to believe that the earning power of corporate America is undiminished).

Myth #2:

Another myth that’s going around is that the IRS will be hiring 16,000 agents in order to enforce ObamaCare. George Will even spouted it on ABC’s This Week on Sunday. After dismissing his co-panelist Paul Krugman as someone who received a Nobel Prize “in economics, not practical Washington wisdom,” Will showed his own “Washington wisdom” by claiming: “One of the ways that this simple, workable legislation is going to be made to work is the IRS is going to hire about 16,000 new agents.” Apparently this bogus claim started with a press release from a Republican Congressman from Texas citing Republican staffers as his source. It was quickly picked up by the right-wing noise machine (complete with pictures of soldiers in battle gear) and then carried over into the mainstream media and stated as fact by shills like George Will. You probably won’t be surprised to find out that it isn’t true. The IRS Commissioner refuted it in a House Ways and Means Committee hearing on March 25th. At year end, employers and insurance companies will send out evidence of insurance coverage just as they send out W2 and 1099 forms today. Taxpayers will attach those to their tax returns and that will be the end of it. The IRS has no intentions of going beyond that to verify coverage.

Don’t tell anyone, but the fun little secret of the individual health care mandate is that it really doesn’t have any teeth. Penalties are low and if someone refuses to pay, the law specifically says that no criminal penalties or liens can be imposed. Soldiers in battle gear won’t be bursting through your door. Fortunately, the experience in Massachusetts suggests that the individual mandate encourages most people to buy insurance even if would make economic sense for them to just pay the penalty … or to refuse to pay it altogether. With something like $300 billion a year in tax evasion, the IRS has bigger concerns than whether or not you buy health insurance.

Myth #3:

I have received this viral email at least a dozen times. I bet you have too (if not, you probably will). It is the “proposed 28th Amendment” to the Constitution that would require that all laws apply to members of Congress. Here is a bit of it:

Subject: An idea whose time has comeFor too long we have been too complacent about the workings of Congress. Many citizens had no idea that members of Congress could retire with the same pay after only one term, that they didn't pay into Social Security, that they specifically exempted themselves from many of the laws they have passed (such as being exempt from any fear of prosecution for sexual harassment) while ordinary citizens must live under those laws. The latest is to exempt themselves from the Healthcare Reform that is being considered...in all of its forms. Somehow, that doesn't seem logical. We do not have an elite that is above the law. I truly don't care if they are Democrat, Republican, Independent or whatever. The self-serving must stop. This is a good way to do that. It is an idea whose time has come.Have each person contact a minimum of Twenty people on their Address list, in turn ask each of those to do likewise. In three days, most people in The United States of America willhave the message. This is one proposal that really should be passed around. Proposed 28th Amendment to the United States Constitution: "Congress shall make no law that applies to the citizens of the United States that does not apply equally to the Senators and/or Representatives; and, Congress shall make no law that applies to the Senators and/or Representatives that does not apply equally to the citizens of the United States."

Note that bit about sending it to 20 people. Not quite as strong as telling you to send it to everyone you know, but probably more effective by making the task more specific and manageable. In any event, it’s a sure tip-off that the thing is bogus.

FACT: Members of Congress are NOT exempt from paying into Social Security.FACT: Members of Congress are NOT exempt from any other laws of general applicability (including any dealing with sexual harassment).FACT: Members of Congress CANNOT retire after only one term with their full Congressional salary. Members of Congress make $174,000 year and receive the same retirement benefits as other federal workers (for which they pay in 1.3% if their salary in addition to the 6.2% Social Security tax). Members of Congress do not begin vesting rights until they have served for five years and are not eligible for a pension until they've completed 20 years of service or after they reach the age of 62. According to the Congressional Research Service, as of October 1, 2006, 413 retired Members of Congress were receiving federal pensions based fully or in part on their congressional service and their average pension was $35,592.

And, specifically with regard to the new health care reform act, Section 1312 explicitly provides that the only health care plans that may be offered to members of Congress and their staff are those provided on the new exchanges set up under the law. So not only are Members of Congress and their staff not exempted from the law, they are the only Americans who will explicitly lose their existing employer-provided health insurance and be required to get their insurance through the new exchanges.

These aren’t the only “myths” (a polite way of saying “lies”) about the health care reform act going around. And I’m sure there will a lot more. The problem with these myths is that they are potentially limitless. There is literally no limit to the stuff people can just make up. But it takes time to refute them (and some, by their nature, cannot be definitely disproved – like how to you “prove” what’s not in a bill that hasn’t even been written?). At some point you would think that they would undermine the credibility of those who propagate them. (But, then, that would assume that falsity is a “bug” rather than a “feature” with these things.)

Some myths about the current healthcare bill explained.There's been a lot of talk about this lately, so I figured that I'd clear up a few common misconceptions people seem to have about the recently passed Health Care Reform bill.Myth 1: With the passage of HCR, bears will be allowed to roam hospitals, devouring those patients too sick to hide or flee.Status: FALSEThe ursine provisions of the health care bill remain controversial with the AMA and other organizations, but, basically, all they do is recognize that in some rural areas, particularly in the Dakotas and Alaska, bears have been acting as health care professionals for decades, and puts them into the category of other alternative health professionals, such as acupuncturists, osteopaths, and killer bees. Bear attacks may be available under some health plans, but those treatments are entirely at the discretion of the insurers.Myth 2: MRIs are once again to be termed "Nuclear Magnetic Resonance Images", and once again, a small percentage of those undergoing this procedure will gain super-powers that will allow them to perform great feats, at a cost to their humanity.Status: FALSEWhile this provision was included in earlier versions of the bill, it was dropped in the face of a strong opposition by Senator Keene and others.Myth 3: ObamaNaziSocialismAntichristApocolpyseRevalations4:15SicSemperTyranisTaxedEnoguhAlready!Status: That's not a myth, that's a bunch of words, some of which are misspelled.Myth 4: A provision of the HCR bill calls to the Lord Above, to send down a dove, with beak as sharp as razors, to cut the throats of them there blokes, what sells bad beer to sailors.Status: Partially true.While this language does exist in the current version of the bill, it is unlikely to stand judicial scrutiny, as it will probably be seen as a violation of the separation of church and state. However, this is merely echoing faith-based programs enacted by individual states. The dove attacks on campus area bars selling Rolling Rock to University of West Florida Argonauts, for instance, can only be applauded, as Rolling Rock is swill.Myth 5: In order to pay for the mandates of this bill, President Obama has traded the treasury of the United States for a handful of magic beans.Status: FALSEOnly one government-owned cow was traded for these beans, which have already more than earned back the initial investment. Also, since the treasury of the US currently contains less than negative fourteen trillion dollars, wouldn't you want to trade it, for just about anything?Myth 6: The HCR bill will allow communists control of our vital bodily fluids.Status: TRUEYeah, this one is totally real. But, to be fair, there aren't that many communistsleft, and those that there are don't actually want that many bags full of lymph and phlegm.